The value of your assets is an essential part of your bankruptcy case. Your assets may be used by the bankruptcy trustee to pay creditors in a Chapter 7 liquidation or by collecting payments from you in a Chapter 13 repayment plan. You may keep your money and property in bankruptcy depending on the value of your assets and the bankruptcy exemptions.
When you file for bankruptcy, your assets become a part of the bankruptcy estate. A court-appointed bankruptcy trustee manages the estate in your case. You basically lose control of your assets, but you can exclude a property through the bankruptcy exemptions.
A bankruptcy trustee’s function is to administer consumer bankruptcy cases. In a liquidation bankruptcy case, the trustee will sell your non-exempt assets to repay your creditors. In a debtor reorganization bankruptcy case, the trustee will collect monthly payments from you.
You have to claim property exemptions so that you can exclude your money or property from the bankruptcy estate. The bankruptcy code provides a list of property that you can exempt. In addition, you can choose to use the state exemptions laws. In Texas, you also have the option to use the federal exemption statutes instead of the state exemptions. There is a specific amount of exemption for a certain property. For example, one of the Texas exemptions is for personal property. You are allowed to exempt up to $30,000 worth of personal property. For a head of a family, the exemption is $60,000. Other assets that you can exempt are homestead, insurance, pensions, public benefits, tools of trade, wages, and miscellaneous. A San Antonio Bankruptcy Attorney knows the up to date and exact amount of each exemption.
Chapter 7 Assets
Although a Chapter 7 trustee can sell your non-exempt assets, he or she will only do so if it will yield a substantial amount. For a partially exempt asset, the trustee will pay the exemption amount out of the sale proceeds. The creditors are paid depending on the priority or type of their claims. For example, if you own a $16,000 RV without any liens on it but the amount you can exempt is only $4,000, the trustee will sell the RV, pay you $6,000 and use the remaining amount to pay your creditors.
Chapter 13 Assets
In a Chapter 13 bankruptcy, the trustee will not sell your assets. You retain ownership of your property. Chapter 13 involves a repayment plan approved by a court. You may also use exemptions to lessen the amount you need to pay. Secured debts and priority unsecured debts are paid in full in a Chapter 13 case through a 3 or 5-year repayment plan. In addition, you have to pay unsecured debts, such as medical bills and credit cards, the exact same amount they would have gotten if you had filed under Chapter 7. This means you have to repay them with an amount not less than the value of your non-exempt assets. So if your RV is worth $16,000 and you can only exempt $4,000 of its value, you have to pay a total of at least $12,000 to your unsecured creditors in your Chapter 13 case. The remaining unpaid amount will be discharged by the judge.
People who consider filing for bankruptcy often wonder what they will have left after they file. An experienced Bankruptcy Lawyer San Antonio can tell you what assets you can exempt. The attorney can also file your claims for property exemptions on your behalf.